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By David R. Sands -
The Washington Times -
Wednesday, December 3, 2008

Major business groups and local officials whose communities depend on the auto industry Tuesday joined the Big Three automakers in a major lobbying blitz to pry tens of billions of dollars in federal aid from a reluctant Congress.

Rallies were held, letters to lawmakers were sent and labor leaders called publicly for assistance as the heads of General Motors Corp., Ford Motor Co. and Chrysler LLC presented detailed plans on how they would use the bailout funds.

All warned of the dire consequences of inaction.

GM, in its submission, insisted that it needed $4 billion by the end of the year just to survive, part of an $18 billion aid request.

“Absent such assistance, the company will default in the near term, very likely precipitating a total collapse of the domestic industry,” the nation’s largest automaker said.

With Ford and Chrysler seeking a combined $16 billion in aid and lines of credit, the nominal cost of the industry bailout is already shooting past the original $25 billion discussed last month.

The chief executives pledged major new investments if they get the loans they are seeking, and they promised to keep their corporate jets parked back home in Detroit when they arrive in Washington late this week. Two of the CEOs said they would travel to the nation’s capital via domestic-made hybrid cars to show they had learned from their public relations mistakes.

Major U.S. business lobbies, including the U.S. Chamber of Commerce, the Financial Services Roundtable and the National Association of Manufacturers, are supporting the industry’s case, as are the United Auto Workers and other labor unions closely tied to Detroit’s success.

An industry support group billing itself as the “Engine of Democracy” announced plans for a Capitol Hill rally later this week with representatives from every state and the District in support of the bailout, in an attempt to dramatize the broad impact of a failure of any of the major U.S. auto firms.

At a rally in Baltimore on Tuesday, Chrysler President Jim Press met with 50 Maryland Port Authority employees and state officials to discuss the company’s impact on the local economy. The privately held Chrysler is the port’s largest exporter.

“The message is about jobs, and preserving our way of life, preserving manufacturing and the essence of adding value. What we now need to do is make sure this is heard in Washington, so those making the decisions can respond to the public will and not make this become a logjam in politics but allow us to resurrect our industry,” Mr. Press said.

Chrysler’s corporate Web site links to a lobbying effort by the company to win congressional approval for the company’s plea.

“We are going to need the help of our employees, suppliers and dealers to communicate the urgency of our request,” the site says.

Despite major price cuts and sales incentives, each of the Big Three on Tuesday revealed sharp sales drops in November. Total sales declined by 31 percent for Ford, 41 percent for GM and 47 percent for Chrysler compared with November 2007.

“Every manufacturer is posting awful numbers and we are no exception,” said Mark LaNeve, vice president for GM’s North America sales, service and marketing division.

In their submissions to Congress, GM and Ford executives offered plans to sell their companies’ fleet of owned and leased private jets. A previous plea by the top executive officers of the Big Three to congressional committees last month was widely seen as a public relations disaster, capped by the revelation that all three top executives had flown to Washington on private corporate jets.

The Senate Banking Committee is scheduled to hear from GM chief Rick Wagoner, Ford CEO Alan R. Mulally and Chrysler Chairman and CEO Robert Nardelli on Thursday. The auto executives will make an encore performance Friday with the House Financial Services Committee.

Spokesmen for all three companies said the top executives would be driving to Washington this time, and that Mr. Wagoner and Mr. Mulally will arrive in company-built hybrid vehicles.

While Congress rushed to approve a $700 billion bailout plan earlier this fall for the financial industry, lawmakers have proved far more resistant to the automakers’ pleas, despite concerted lobbying from Midwestern lawmakers, the backing of President-elect Barack Obama and the fears of major economic spillover effects.

Some lawmakers and critics say the U.S. car industry is paying the price for more than a decade of bad marketing and engineering decisions, while others argue they see no sign the companies are ready to take the hard steps needed to return to profitability.

“No one’s too big to fail,” Senate Majority Leader Harry Reid, Nevada Democrat, said in an interview on Fox News. “We hope we can work something out … but we don’t want to throw them a lifeline if that lifeline won’t get them to shore.”

House Speaker Nancy Pelosi, California Democrat, said late Tuesday that she had not reviewed the new submissions from the automakers, but she told reporters that some kind of federal aid was “inevitable.”

“It’s pretty clear that bankruptcy is not an option,” she said, adding that the process could take far too long for the U.S. auto companies to survive. But Mrs. Pelosi stopped short of promising another lame-duck session of Congress next week to consider a new aid package for the automakers.

Congressional Democrats have argued the Bush administration can tap the $700 billion Wall Street rescue fund to help the auto industry. But Treasury Secretary Henry M. Paulson Jr. has rejected the idea, saying the money is still needed for the shaky credit markets.

The car companies argue they have made significant changes in manufacturing, fuel economy and costs in a bid to stay competitive, only to be blindsided by a global credit crunch that has emptied showrooms and put auto dealerships around the country out of business.

Ford, considered the healthiest of the Big Three, asked in its 32-page bailout plea for a taxpayer-financed $9 billion line of credit, on which it would draw only if needed.

General Motors said in its submission that it needs $12 billion in loans in addition to a $6 billion credit line in all, with $4 billion needed by the end of the year just to stave off insolvency. Both companies say they plan to cut back on the number of models they make, trim their dealership networks and possibly sell off unprofitable foreign holdings.

Ford’s Mr. Mulally said he and other Ford executives would be willing to accept strict limits on compensation if they did draw on the federal credit line, but the company said in its filing it could not give the government senior preferred status for its loans that would put the taxpayer ahead of any other company creditor — something Mr. Reid had demanded.

“A condition of senior status for any government loan could cause lenders or holders of our debt to allege a debt default, which could result in an acceleration of indebtedness and lead to the very result the legislation was designed to prevent, namely, a liquidity crisis,” the company said.

The Big Three automakers rank in the middle of the pack among U.S. industries in the amount of money they devote to lobbying, according to a study by the Center for Responsive Politics. Even including independent auto dealers, the carmakers ranked 34th among U.S. industry groups in political contributions, giving a combined $21.6 million for lobbying Congress in the first three quarters of 2008.

But the industry can call on a potent alliance of unions, suppliers and local officials to help make its case.

Wayne County Executive Robert Ficano has put up $10,000 of his own money to pay for radio ads in support of the bailout running in three Southern states and the District of Colombia.

“We have to be proactive,” said Mr. Ficano. “We cannot sit idly by and watch any Big Three company file for bankruptcy.”

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